Debt help buys financial freedom for years
From The Freedom Report CAP UK
In December 2016, Christians Against Poverty (CAP) published The Freedom Report - research on the importance of debt advice in building financial capability and resilience to stay free of problem debt.
The report shows nine in ten who ask for help with problem debt learn skills that keep them in the black for years afterwards.
CAP carried out in-depth telephone interviews with 214 previous debt clients, helped by churches, who had cleared their debts up to five years before. The results were astonishing: 93 per cent were still free of problem debt.
“Once you’ve lived with constant calls from creditors, the stresses of rent unpaid and visits from bailiffs, you really do not want to go back there,” said CAP’s Chief Executive Matt Barlow. “The fantastic thing we see from The Freedom Report, as we’ve called it, is our clients have the personal determination and have learned the skills to keep them out of debt crisis. They know how to draw up a household budget and stick to it, allowing them to live within their means.”
Low income is the main cause of debt among CAP’s clients and, despite average household income being just over £14,000, the results were very positive:
-
Three quarters (74%) had not used credit since becoming debt free
-
More than eight in ten (85%) still felt in control of their finances
-
Eight in ten (82%) were still living to a budget
-
Nearly half (46%) now had savings
-
93% of clients have a positive relationship with their bank
Archbishop of Canterbury Justin Welby, CAP’s Patron, said: “It’s easy to imagine that someone living with poor finances will always be in that state, that poverty is too big a problem for us all to tackle. This report is exciting because it shows that if someone gets the right level of support, they can conquer their debt problems - not just to become debt free but also to stay in the black, without the need for expensive credit, successfully managing their household finances for years to come. It tells us that no matter how hopeless a situation can first look, significant change is possible.”
Some other findings:
-
The skills learned through CAP’s service are considered valuable and have a ripple effect on the financial wellbeing of clients’ social networks.
-
Most do not use credit after becoming debt free.
-
Where credit is taken out, it is predominately managed well with repeat problem debt only affecting a handful.
-
Repeat problem debt is rare, but where it does occur this happens quickly and often only through priority arrears. This appears to be the result of wider circumstances rather than a lack of budgeting skills
-
Several respondents reported having a more positive outlook following help, and also feeling less constrained or guilty where spending was concerned.
-
As well as building financial resilience through savings, for many, saving had also allowed them to realise more concrete positive outcomes and make purchases that were previously out of reach.
-
Of those surveyed, 12% had been able to buy a car and 18% had made home improvements since becoming debt free. 24% had also paid for a holiday, a luxury that the vast majority of CAP clients have not been able to afford for many years before becoming debt free.
-
Others reported finding pleasure in being able to buy smaller treats for themselves and their families, such as regular days out with the grandchildren.
Last word from Kylie - a client,
"Working with CAP was a really transformative experience for me. Since the Debt Relief Order went through and I became debt free, I have learned how to properly budget and structure my spending. I feel like I have control over my money and that’s new! It’s amazing how little changes can make such a difference to your whole life. The children’s dad, Gareth, and I are now back together and welcomed our fourth child in 2014. Our family is so much more settled now and you can just tell we’re all so much happier – we’re always smiling."
Download the report
here.
Retweet about this article:
From The Freedom Report CAP UK, 20/02/2017